Katrina Strains Businesses Outside Its Path

September 2, 2005--Montgomery, Alabama's 6,000 hotel rooms have been full since Sunday, but evacuees fleeing Katrina's destruction continue coming in from neighboring Mississippi, Georgia and Louisiana, setting up camp in parking lots if necessary.

Mike Castanza, general manager of Chappy's Deli can spot them easily. "They're packed in cars and trucks with plastic bags full of clothes," said Castanza. Yesterday, he organized a free meal for 30 evacuees at a local hotel, and tomorrow morning his restaurant will serve pancakes, eggs, and grits to 97 more at Whitfield United Methodist Church.

Spared the physical trauma of hurricane, Montgomery's business community is helping bear the cost of hosting Katrina's victims who have come in need of medicine, health care, shelter, and jobs. Anna Buckalew of the Montgomery Chamber of Commerce expects this labor of love to last for several months as federal agencies sort out recovery and rebuilding of Gulf cities affected by Hurricane Katrina. And some fear that labor and materials may be sucked into reconstruction efforts that ramp up in the coming months.

"A lot of people are going to have to decide whether they're going to go to the coast, or stay in their home markets," said Ken Upchurch, president of Upchurch Construction, a commercial developer in Montgomery. "There's certainly going to be a lot of contracting opportunities as a result of the storm."

Construction labor has been already in short supply for years. Upchurch has begun offering health insurance and profit sharing to hold on to his 100-man workforce. He is not sure how he will respond if workers "go south for a few dollars more per hour."

Upchurch expects roofing materials, lumber, and sheetrock supplies to tighten as reconstruction efforts ramp up. The torrid pace of real estate development has already driven up his costs by 15 to 18% for steel, concrete and lumber. "Plywood will probably go through the roof I suspect," said Upchurch.

Montgomery retailers were also caught unprepared for the challenges of sheltering evacuees. Chain stores and individual proprietors, for example, are learning to deal with prescriptions, health care plans, food stamps and welfare vouchers from other states.

"We've never had something of this magnitude happen," said Alison Wingate, of the Alabama Retailers Association. "We're learning how to deal with it as it unfolds."

Wingate spent the afternoon helping the Federal Emergency Management Agency and the local realtors' association search for places to provide shelter for evacuees.